Double, Double, Tolstedt and Trouble: Pretty much everyone wants to know why Wells Fargo isn't holding CEO John Stumpf and former consumer banking head Carrie Tolstedt more accountable for 2 million phony accounts created without customers' permission. Last week five Senate Democrats, including Elizabeth Warren, D-Mass, pointed out in a letter to Stumpf that Tolstedt received more than $20 million worth of bonuses between 2010 and 2015, “justified by the company in certain instances because of the 'strong cross-sell ratios' in her division,” no doubt bolstered by the phony accounts. Stumpf was hammered by lawmakers for three hours Tuesday, with Warren among the most aggressive. Besides calling for his resignation, she asked why he didn't fire Tolstedt before she retired, despite the fact that Wells was aware of the pending settlement over the phony accounts. Stumpf replied that he was looking at her "full body of work,” while also hinting for the first time that Tolstedt may have been forced out. Though he said Tolstedt "chose to retire" after 27 years, he also said Wells' chief operating officer, Tim Sloan, had told her that the bank "wanted to go in a different direction.” A lawsuit was filed Wednesday against Tolstedt and the Wells board, claiming its refusal to claw back any of Tolstedt's bonuses is “a breach of their fiduciary duties to shareholders.” Hillary Clinton also criticized Tolstedt's reported $125 million payout in an open letter to Wells Fargo customers, in which she also called for "real consequences" for Wells executives (though she did not name Stumpf). "It's hard to imagine that top executives were unaware of a problem that involved thousands of the firm's employees," she said. "After all, they imposed sales targets and compensation incentives in ways that led to this behavior.” She also vowed to protect the Consumer Financial Protection Bureau from Republican attempts to undermine it.
B of A Bargains: Bank of America has settled its "bros club" lawsuit with Megan Messina, the former managing director who sued in May claiming the bank paid her and other women substantially less than male coworkers and that it tried to push her out when she raised allegations of improper behavior that harmed clients. According to her complaint, she was paid about a third of what her co-head made for 2015, and a female trader who reported to him made less than male colleagues because she took maternity leave. Terms of the settlement were not disclosed in a filing in Manhattan federal court. However, Citigroup paid $33 million to resolve a bias suit by female brokers in 2008; and Morgan Stanley set up a $46 million claims pool to settle a similar claim by former financial advisers in 2007. B of A offered Messina a $500,000 severance to drop claims earlier; the judge overseeing the case agreed to remove that detail from the public record last month, as you may recall from reading here.
Digital Drive: Digital has been seen as the death knell of branches, but JPMorgan Chase's branches have been crucial in building long-term relationships with more lucrative customers, even in today's high-tech world, says Erin Hill, the company's head of consumer branch banking and wealth management. "If we were trying to shift to an all-digital channel, I don't think we'd have nearly the success we've had," Hill says, adding that the bank “cannot be naive to the fact that our customers want to be able to engage with us when and where they want in a very easy manner.” JPMorgan has been investing heavily in a digital this year, launching a full redesign of its website, a fintech accelerator, a new digital headquarters and, this week, investing in InvestCloud, a startup that provides cloud-based software to the securities industry. "Across the wealth spectrum, our clients are increasingly engaging with us digitally," says Mary Callahan Erdoes, CEO of asset management. "Pairing these new technological capabilities with our trusted guidance will help our clients achieve their long-term financial goals with flexibility in how they interact with us and our advisers."
The Escape Clause: Politico has attempted to paint a picture of fintech as “a woman's world,” where female bankers who “want to escape the alpha male-driven culture of traditional finance” can find another path and where they no longer “have to just grin and bear” the gender bias working against them. (Nevermind that they might have their own interest and instinct for it, on top of their creativity and capability.) “Given all the obstacles in traditional finance, it seems only a matter of time before many of its women workers who want to escape to greener pastures will end up in the fintech industry,” it says. But one important point is buried at the end: “Before women can escape from such an environment, female-led startups must get funding, which still remains a significant barrier for women who want to set up a fintech company.” Male founders are 86% more likely to attract venture capital than female founders. “It's a real problem,” said Ghela Boskivich, one of the organizers behind the FemTech Leaders network. “They often have to bring a man in, in order to get some funding.” (Not surprisingly, female partners are more likely to invest in companies with female executives and three times more likely to invest in one with a female CEO.)
Honesty Is the Best Policy: In one of the many op-eds reacting to the Wells scandal, Rachel Morrissey, producer of Breaking Banks, made a plea for financial institutions to incentivize honesty, service and stewardship. “Regulations and laws don't exist so that we can fine and incarcerate people. They exist to give us a framework of acceptable behavior,” she wrote on LinkedIn. She worries about fines — even ones as high as Wells' $190 million — being seen by banks as invitation to behave badly just because they can afford to.
Wells Fargo's group risk officer for the community banking division, Claudia Russ Anderson, has begun a six-month unpaid leave of absence. Her replacement, Vic Albrecht, will report jointly to Mary Mack, Carrie Tolstedt's successor, and Mike Loughlin, the bank's chief risk officer.
Jennifer Davis, the deputy chief financial officer of Santander Consumer Holdings USA, will resign at the end of the year. She served as interim CFO following a leadership shake-up in July 2015 and moved to the role of deputy CFO in December.
MUFG Union Bank in San Francisco has appointed Lisa Roberts as head of private wealth management for Northern California and the Pacific Northwest.
In Case You Missed It
Facebook Follow: San Antonio Federal Credit Union is drawing inspiration from Facebook in how it brings its Card Control app to market. Facebook Messenger split off from the primary Facebook app in 2014. Similarly, the credit union's Card Control will be more like a companion or “sunordinate” app to the main banking app. "We wanted a mobile-first approach,” but the credit union's own mobile app was somewhat limited, said Adele Glenn, emerging channels innovation architect at San Antonio Federal. “We don't have push alerts and our vendor couldn't provide it to us.” Card Control lets members turn their cards on or off at any time, set spending thresholds and limit spending to certain merchant categories. Once users install both apps, "it will send them back and forth, the same way Facebook and Facebook Messenger work," Glenn said. "It's a seamless experience, but again, in two separate apps."
The Venture Capital of China: Does the name Chen Xiaohong ring a bell? She's a former librarian who raised the largest female-founded venture capital fund ($500 million), and she's working hard to bring even more women into technology. Her fund is based in Beijing, which is particularly fertile ground for women in technology. In China, it's women who launch more than half of all new Internet companies (55%) and a quarter of all entrepreneurs are women, according to Chinese government estimates. About 17% of investing partners are women. In the U.S. 10% of investing partners are women. “The venture capital industry in the U.S. has been a private men's club,” said Gary Rieschel, an American who founded the China-based Qiming Venture Partners. “It has been much more of a meritocracy for women in China.” We recommend you read the full story about the rise of China's female VCs, how they deal with sexism and work-life balance and their efforts to inspire more women in tech.
Campus Leadership: U.N. Women's HeForShe released a report that details' commitments to gender parity on the campuses of 10 international universities. Their goal is to achieve on-campus gender equality by 2020. The announcement follows a slew of high-profile campus sexual assault cases in the U.S., including that of Stanford student Brock Turner, whose six-month sentence (of which he completed half before being released) has weighed heavily on a national debate about how law and society views sexual assault.